Argentina Is Now More Politically Stable Than Brazil

Mauricio Macri, Argentina’s new president. Investment firm Schroders in London says Argentina is in much better shape than its rival Brazil. (Photo by Diego Levy/Bloomberg)

Argentina versus Brazil. It’s bigger than the Red Sox versus the Yankees. The Patriots versus, well, the NFL. ManU versus Arsenal. Who is better Pele or Maradona? If they represented a country’s government, then it’s Maradona today. With Cristina Kirchner no longer in power, businessman and new president Mauricio Macri now trumps Brazil’s president Dilma Rousseff. The market has decided that Argentina is better.

“We find greater reason for optimism there,” says Craig Botham, emerging markets economist at Schroders in London. He says that, oddly enough, Argentina is further along the “reform path” even though Macri just took over in January. “The new government has an ambitious and wide ranging reform platform, and a popular mandate to back it,” Botham says. “Progress has already been made on the issue of the bond holdouts, and the legislation received support across the (political) spectrum. Fiscal and inflation targets are next, and to us they strike the right balance between bold and credible. Officials are frank, but confident about the challenges they face.”